diff --git a/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java b/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
index 3213970cc260..1106633efdb0 100644
--- a/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
+++ b/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
@@ -403,6 +403,7 @@ public class TypeConversionUtil {
       final PsiClass class1 = PsiUtil.resolveClassInType(typeArg1);
       if (class1 instanceof PsiTypeParameter) {
         for (PsiType type : class1.getExtendsListTypes()) {
+          type = substitutor1.substitute(type);
           if (TypesDistinctProver.provablyDistinct(type, typeArg2) && !isAssignable(type, typeArg2)) return false;
         }
       }
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/CastConversionToTypeParameter.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/CastConversionToTypeParameter.java
new file mode 100644
index 000000000000..2499d4df03ef
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/CastConversionToTypeParameter.java
@@ -0,0 +1,7 @@
+import java.util.List;
+
+abstract class Test implements List<Test> {
+  private <T extends List<T>> T foo() {
+    return (T)this;
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
index ac8bb477b027..30b6cdd02f13 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
@@ -455,6 +455,10 @@ public class GenericsHighlightingTest extends LightDaemonAnalyzerTestCase {
     doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false);
   }
 
+  public void testCastConversionToTypeParameter() throws Exception {
+    doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false);
+  }
+
   public void testJavaUtilCollections_NoVerify() throws Exception {
     PsiClass collectionsClass = getJavaFacade().findClass("java.util.Collections", GlobalSearchScope.moduleWithLibrariesScope(getModule()));
     assertNotNull(collectionsClass);